I am just trying to kill some boredom here while recuperating from a slip disc, not a very decent experience but I guess life is such that when it rains lemon, you make lemonade out of it so here I am, on my bed with a laptop that weighs a ton – because my Surface Pro 4 just died on me as well, looking for things to buy and some free movie online but the thing that kept me thinking is the little Direct Mailer (DM) from Volkswagen Malaysia.
Image taken from VWClubMalaysia Facebook Group by Kah Hoe Ng
In my past life as a product portfolio manager, I can understand why I am not in their database mailing list because selection program marketing always target database that are likely to succeed i.e. take up rate per campaign, otherwise why kill trees and spend money on none target audiences and sadly, I am not their target audience because I drive a Golf R. Come on, should at least give me hope that someone wants my Golf R ?
Yes, Volkswagen cars have gone through severe depreciation value in the past few years, no thanks to the infamous DSG7 protest at Volkswagen HQ, followed by social media outbreak by certain camp of people (some not even owners, probably other car salesmen as well) but that’s how social media is, someone starts a “I have heard” and everyone just jumps on it and next thing you know, perceive value goes south. You know, I used to have MK5 GTI that I bought for 180k (pre-reg units) and I sold it for 150k after 3 years of ownership. Those days, we were proud Volkswagen owners, I still am but …..
That’s a bit history as far as I can recall. I believe the birth of this DM campaign aims to help diving prices by offering owners additional trade-in value when they purchase the new Jetta / Passat B8; sounds like an anti attrition cum sales campaign. Good news for owners who purchased their Volkswagen 5/6 Years ago and looking to purchase a newer generation Volkswagen.
However, I still hear some disgruntled remarks going on in the VWClubMalaysia Facebook Group i.e. trade in prices not attractive 50k only for mk6 Golf and this triggered some thoughts, what value are the owners expecting for a 6 years old Volkswagen? What is the expected depreciation value per annum? Are there misconception about the prices, can we make mathematical sense of this?
Since I am quite free, so I decided to do a bit finding and I would like to share them but first, I would like to put some disclaime before I get shot badly;
- Prices are based on online car market value guide available at carbase.my;
- There are too many variants, so I randomly picked lowest variant for comparison without much in-depth understanding what they are so I stand to be corrected, but please have mercy on a temporary disabled guy;
- My opinion are my sole opinion, not representing anyone/anything;
- If I made any typo; I had to reconstruct the entire table, please inform me, I will rectify it;
Here we go!
| ||Manufacturer||Model||Vehicle Description||Original Price (RM)||Market Value||Depreciation (%)
|Ford||Mondeo||2011 FORD MONDEO 4D SEDAN 2261||174,102||51,600||70.36
|Peugeot||308||2011 PEUGEOT 308 THP 4D HATCHBACK 1598||113,888||33,800||70.32
|Volvo||S40||2011 VOLVO S40 4D SEDAN 1999||169,090||56,600||66.53
|Volkswagen||Passat B7||2011 VOLKSWAGEN PASSAT TSI 4D SEDAN 1798||184,888||62,300||66.30
|BMW||E90 320||2011 BMW 3 20i EXECUTIVE (CKD) 4D SEDAN 1995||241,072||85,400||64.57
|Volkswagen||Jetta||2011 VOLKSWAGEN JETTA TSI 4D SEDAN 1390||149,888||54,100||63.91
|Volvo||S60||2011 VOLVO S60 T5 4D SEDAN 1999||288,000||105,100||63.51
|Peugeot||508||2011 PEUGEOT 508 THP 4D SEDAN 1598||164,673||63,300||61.56
|Mercedes||C200||2011 MERCEDES-BENZ C 200 CGI BlueEFCY ELEGANCE(CKD) 4D SEDAN 1796||255,888||99,000||61.31
|Alfa||159||2011 ALFA ROMEO 159 JTS SELESPEED 4D SEDAN 2198||195,888||76,200||61.11
|BMW||118||2011 BMW 1 18i EXECUTIVE (CBU) 4D HATCHBACK 1995||204,072||80,300||60.65
|Audi||A4||2011 AUDI A4 TFSI STANDARD 4D SEDAN 1798||234,071||92,500||60.48
|Volkswagen||Golf 6||2011 VOLKSWAGEN GOLF TSI 4D HATCHBACK 1390||148,888||59,700||59.90
|Volkswagen||Golf MK6 GTI||2011 VOLKSWAGEN GOLF GTi 4D HATCHBACK 1984||209,888||84,200||59.88
|BMW||F10||2011 BMW 5 23i (CKD) 4D SEDAN 2497||383,072||157,100||58.99
|Mercedes||E200||2011 MERCEDES-BENZ E 200 CGI BlueEFCY ELEGANCE(CKD) 4D SEDAN 1796||366,060||154,400||57.82
|Volkswagen||Scirocco||2011 VOLKSWAGEN SCIROCCO TSI 2D COUPE 1390||188,888||79,800||57.75
|Renault||Megane Rs||2011 RENAULT MEGANE SPORT 250 CUP 2D HATCHBACK1998||228,761||111,000||51.48
Some thoughts from this little exercise;
- Depreciation for most European make cars more than 5 years average between 50-60%;
- Most cars depreciate higher in the beginning of the years and subsequently stays flat, as opposed to continue depreciating, example IIRC BMW E36 3-series now, although being more than 10 years of age, holds price around 15-20k depending condition;
- If theory of most cars depreciate higher in the first 2 year of ownership, would it be logical to say that the longer you own the car, prices will rationalize? For example, at year 2, depreciation at 40%, at year 6, depreciation at 60%, so eventually on a 6 year basis, the car depreciates at 60% does not sound too bad. I am just playing with the idea, need more in depth data to support this;
- The thought that your car is going to be worthless is not necessary true, even my mom’s proton saga worth 1k still after 20 years ?
And my curious mind continues with another question, will the 6 year old Golf Owner benefits from the current trade in program? Let’s say that I have a 2011 Golf Mk6 TSI, now market rate at RM 59,700.00. Assuming I took a 7 years loan, and I decided to sell my car, how much do I have to pay to the finance/redemption/settlement.
Golf MK6 TSI Projected Loan Schedule
I used to do this daily, excel was my best friend but today, it took me a while to figure out everything. Anyway, based on my calculation, on year 6, if I settle my hire purchase loan, i would still have RM21,758.23 outstanding. The market rate of the Mk6 Golf from carbase is 59,700.00 but I believe a likely value that you will get is 40,000.00 if you trade in. That’s not too bad considering you get back your original down payment of 14,888.80, with some surplus to buy another car.
However, if you decide to trade in and buy a Volkswagen Jetta, (a little birdie tells me that) you will received a 10,000.00 + bonus for your trade in which makes it to 50,000.00 or more. Take the balance, put on down payment for a new Jetta, pays less installment at 1,515.00 vs prior of 1,853.00 and goes home with a new car. Good deal? I am not sure, no one wants my Golf R apparently.?
New Jetta Highline projected Loan Schedule
Reality is, price of car will not appreciate (unless you own a classic) unlike property, the longer you hold on the car, the worse it gets. It’s not like you are going to wake up tomorrow, and hey! Look, my car is worth double its value! Never going to happen. I am not sure if my little analysis and reasoning helps you, but it’s worth a discussion, at least.
This excel sheet will be made available in the Facebook Group, as usual, open for ideas and matured discussion.
p.s. Anyone wants a champion-built Golf R?